Way back when dinosaurs roamed the earth, local pilots pressed Gallatin Airport Authority to improve the sod landing strip next to crosswind runway 3-21. Then manager/director Teddy Mathis ramrodded through the current location, which parallels main runway 12-30. The ultimate goal of the Authority was to bloat infrastructure into parallel runways, keeping us little GA airplane drivers from the “real” airline traffic. This, of course, would defeat the entire original purpose of improving the dirt strip to begin with.

Sure enough, talk is now afoot to “go parallel.” How and when do these projects start? There has been nothing in the public Airport Authority Monthly Meeting Agendas which would warn the public that this upgrade is in the works. Yet, in this email from the airport, here is mention of the wheels turning towards turning the sod strip into a second runway. I guess this constitutes “public notice?”

This meeting will provide an opportunity to address any questions and/or concerns pilots have on Air Traffic Control or Airport Operations. … Updates will also be provided on the interchange project and the parallel runway environmental assessment. We look forward to seeing you on Thursday, May 15th.

But this isn’t the whole story. By the FAA’s definition, “General Aviation” is all activity not airline, military, nor government. Corporate jets are also General Aviation. Add 6% to that original 76% to kick the number up to 82%. Also lost in these figures is the fact that “Passenger and cargo airlines” includes cargo activity defined as General Aviation. How much of that 18% is GA activity – 3%?

The Chronicle quote should read, “General aviation accounted for OVER 82% of the airport’s traffic.”

…No surprise! This is a fact we at Paragon have been touting for years. Airplanes are not flown, — nor is flight safety advanced — by passengers. Pilots operate aircraft, deliver passengers to their destinations, consume fuel, fight weather, and deal with airport infrastructure. General Aviation pilots are the largest body of operators at Gallatin Field. Yet, GA gets no respect by the airport’s independent, unaccountable regulating Authority. GA has no standing advisory chair on the board. Decisions are made first and foremost to promote airline growth. The national aerospace system is “first-come-first-served,” yet at Gallatin Field GA is discriminated against as airliners are often given priority over GA aircraft.

Whenever the Airport Authority argues that “general aviation does not pay its way at the field,” it must be reminded that GA did not want, nor do we need need, much of the infrastructure which has driven up operating costs for the airport. It is well past time that General Aviation is respected for its contributions at the field, and has a permanent voice on the Gallatin Airport Authority board.

September 2011 Edward J. Erler Professor of Political Science, California State University, San Bernardino

Edward J. Erler is professor of political science at California State University, San Bernardino, and a senior fellow of the Claremont Institute. He earned his B.A. from San Jose State University and his M.A. and Ph.D. in government from Claremont Graduate School. He has published numerous articles on constitutional topics in journals such as Interpretation, the Notre Dame Journal of Law, and the Harvard Journal of Law and Public Policy. He was a member of the California Advisory Commission on Civil Rights from 1988-2006 and served on the California Constitutional Revision Commission in 1996. He has testified before the House Judiciary Committee on the issue of birthright citizenship and is the co-author of The Founders on Citizenship and Immigration.

The following is adapted from a speech delivered at a Hillsdale College National Leadership Seminar on May 24, 2011, in Dallas, Texas.

The Constitution and Limited Government

Two cases that are currently making their way to the Supreme Court may well in the short term decide the constitutional issue of the reach and extent of the federal government. At stake, in other words, is the future of limited government. And together, these two cases present an exceedingly odd situation. In the case of the Arizona illegal alien law, the federal government is suing a state for constitutional violations; and in the case of the Patient Protection and Affordable Care Act—that is, Obamacare—more than half the states are suing the federal government, contesting the Act’s constitutionality. It is indeed a litigious season.

But the Supreme Court’s decisions in these two cases may not be the last word, because both of them present eminently political issues that will have to be decided ultimately by the American people.

The administrative state, of course, always seeks to extend its reach and magnify its power. This is an intrinsic feature of a system where administration and regulation replace politics as the ordinary means of making policy. If there are to be limits to the reach of the burgeoning administrative state, they will be political limits imposed by the people in the ordinary course of partisan politics. The advent of the administrative state poses the greatest challenge to limited government, because it elevates the welfare of the community—whether real or imagined—over the rights and liberties of individuals. The task today is to confine the federal government to its delegated powers. The minions of the administrative state seek to destroy constitutional boundaries in their desire to replace politics with administration. This is tantamount to denying that legitimate government derives from the consent of the governed, or that limited government rests on the sovereignty of the people.

One of the proofs offered in the Declaration of Independence that King George was attempting to establish an “absolute Tyranny” over the American colonies was the fact that “He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.” Obamacare certainly fits the description of the activities denounced in the Declaration. The number of regulations and the horde of administrators necessary to execute the scheme are staggering. We have only to think here of the Independent Payment Advisory Board. It is a commission of 15 members appointed by the President, charged with the task of reducing Medicare spending. This commission has rule-making power which carries the force of law. The Senate, it is true, will have the power to override its decisions—but only with a three-fifths majority. There are no procedures that allow citizens or doctors to appeal the Board’s decisions. The administrative state—here in the guise of providing health care for all—will surely reduce the people under a kind of tyranny that will insinuate itself into all aspects of American life, destroying liberty by stages until liberty itself becomes only a distant memory.

The advent and extraordinary success of the Tea Party movement, with its emphasis on restoring limited government, has made this a propitious time to rethink what the Framers meant by limited government and how they understood the relationship between limited government and the protection of rights and liberties. It is rare to see a people acting spontaneously in a political cause. The Tea Party movement must be regarded as a testament to the independent spirit—the freedom-loving spirit—of the American people.

How did the Framers understand limited government? In the first place, limited government was not for the Framers identical with small government, as the Tea Party sometimes tends to believe. The identification of limited government with small government was the position of the Anti-Federalists who opposed the ratification of the Constitution. Limited government, for the Anti-Federalists, meant government that was too weak to threaten the rights and liberties of the people. Small government was, therefore, both the necessary and sufficient condition of political freedom. Consequently, the Anti-Federalists preferred a purely confederal form of government in which the states assumed priority.

The Federalists, on the other hand, regarded confederal government as an attempt to do the impossible: to create a sovereignty within a sovereignty. Conflicting claims to sovereignty would be debilitating and would render the government of the whole ineffective—as was surely the case under our first constitution, the Articles of Confederation.

The Framers of the Constitution settled upon a novel design for government, one that Madison said was “partly national, partly federal.” For some purposes, Madison explained, we will be one people; for others, we will be multiple peoples. With respect to the national features—those things that concern the nation as a whole—the federal government will have sovereignty—complete and plenary power to accomplish the objects entrusted to its care in the Constitution. Those objects are principally found in Article I, Section 8 of the Constitution. National defense, for example, is exclusively delegated to the federal government. And since the exigencies that face nations in foreign affairs are unpredictable and innumerable, the federal government must have sovereignty to fulfill this delegated trust. And if that trust is to be fulfilled, the federal government must also be accorded the necessary means to achieve that end. If this entails large government—and today it surely does—then large government must be compatible with limited government. Similar reasoning applies to all the objects delegated to the care of the federal government.

The Declaration of Independence provided the authoritative statement of America’s political principles. For the first time, government was said to derive its legitimacy—its just powers—from “the consent of the governed.” This was a turning point in world-historical consciousness: no longer would it be possible to argue that sovereignty belonged to governments or kings—even if kings claimed appointment by divine right.

In order to form just government, the people delegate a portion of their sovereignty to government to be exercised for their benefit. The fact that only a portion of sovereignty is ceded by the people is the origin of the idea of limited government. The people delegate only some of their sovereignty to government, and what is not granted is retained by the people—the people, for example, always reserve (and can never cede) the ultimate expression of sovereignty, the right of revolution. The Declaration describes this right as “the Right of the People to alter or to abolish” government when it becomes destructive of its proper ends—namely, the protection of the safety and happiness of the people. This right of revolution, as understood by the Founders, was the right that secures every other right, because it serves as a constant reminder of the sovereignty of the people.

The Anti-Federalists never understood these revolutionary implications; they seemed to believe still that governments, not the people, were the ultimate repositories of sovereignty, and that the only way to secure the rights and liberties of the people was to weaken the power of government—as if freedom existed only in the exceptions to government power. But as Madison wrote, “Energy in government is essential to that security against external and internal danger and to that prompt and salutary execution of the laws which enter into the very definition of good government.”

What limits the federal government is not a limit on its power to act, but the limited range of objects entrusted to its care—the enumerated powers of government. The powers not delegated to the federal government nor forbidden to the states in the Constitution (e.g., ex post facto laws, bills of attainder, and laws impairing the obligation of contracts) are reserved to the states. These are the police powers, which are generally described as the power to regulate the health, safety, welfare and morals of the citizens of the states.

In cases of conflict, the supremacy clause of the Constitution gives preference to the federal Constitution and laws made in pursuance of the Constitution. The supremacy clause was described by Madison as an essential improvement over the Articles of Confederation. Where there is no final authority to arbitrate disputes between the federal government and the states in this “compound Republic,” government will be paralyzed. Madison confessed, however, that the exact boundary between the powers of the federal government and the state governments will be impossible to determine in advance. The precise lines of demarcation will have to be worked out in practice. The Supreme Court—and through the supremacy clause, the state courts—will have to determine conflicts on a case by case basis.

An illustration of the difficulties of drawing clear lines between federal and state authority in our “compound Republic” is the Arizona illegal immigration bill, passed in April 2010. The law allowed police officers to verify the immigration status of any person after a valid stop or arrest if there “is a reasonable suspicion that the person is unlawfully present in the United States.” Everyone remembers the hysteria that was unleashed when the bill passed. The President called the law irresponsible, saying that it threatened “basic notions of fairness.” Others said the provision of the bill relying on “reasonable suspicion” would mandate racial profiling; and some of the more hysterical commentators even insisted that the law was tantamount to genocide. The Assistant Secretary of State felt compelled to apologize to members of a Chinese delegation visiting the United States for this egregious assault upon human rights. One can only imagine the bemused looks on the faces of the Chinese delegation.

The President ordered the Justice Department to intervene. And to the surprise of many, the Justice Department’s lawsuit did not seek to enjoin the law based on racial profiling or equal protection or due process, arguing instead that the law conflicted with the federal government’s exclusive power to regulate immigration. Perhaps someone had explained to the Attorney General that “reasonable suspicion” has been a part of our due process jurisprudence for many years. It means that a police officer can question on suspicion that is less than probable cause; reasonable suspicion, of course, must be something more than a hunch or a guess or an intuition—it must be based on articulable facts. In addition, the Supreme Court in 1975 ruled that ethnicity could be one of the factors determining reasonable suspicion. The Arizona law, in contrast, disallowed any use of ethnicity in determining whether a person could be asked about his immigration status.

In United States v. Arizona, the Federal District Court judge enjoined the operation of the law because it intruded upon the federal government’s exclusive power to regulate immigration and control foreign policy. On appeal from the District Court, one piece of evidence adduced by the Ninth Circuit Court of Appeals that the Arizona law was an unconstitutional impingement upon the federal government’s exclusive power to conduct foreign policy was the fact that the President of Mexico and the heads of several other Latin American countries had expressed severe criticisms of the bill both in the press and in amici briefs! Rarely do we encounter such humor in court opinions, however unintended the humor might be.

The Constitution, of course, does not specifically grant control over immigration to the federal government. Instead Congress has power to “establish a uniform Rule of Naturalization.” Control over naturalization, however, seems to imply control over immigration—so uniform rules governing immigration would seem, by necessary implication, to fall within the scope of federal power. The real question here—although it was not addressed by the District Court or the Court of Appeals—was what power, if any, devolves upon state governments when the federal government fails to carry out its obligations. The District Court had candidly noted that the Arizona law was passed “against a backdrop of rampant illegal immigration, escalating drug and human trafficking crimes, and serious public safety concerns.” In the face of federal inaction or manifest indifference, does Arizona have the reserved power—indeed the obligation—to secure the safety of its citizens? The President’s recent remarks that the border has been secured and that it is now time to think of providing a path to citizenship for illegal aliens is, in reality, a statement of declared indifference to the people of the State of Arizona and to all the border states similarly situated. Surely those states have the constitutional right, sustained by their police powers, to protect themselves through laws that are as unobtrusive as the Arizona law. But in the District Court’s judgment, the Arizona law invoked “an inference of preemption” because it placed an “impermissible burden” on federal “resources and priorities” and inevitably “will result in the harassment of aliens.” The burden on federal resources stems from the fact that there will be an increased number of requests to verify immigration status. This increased burden will in turn force the immigration services to reallocate resources away from other priorities. Such is the logic of the District Court.

These reasons seem trivial when compared to the real and pressing dangers that Arizona faces as a result of federal inaction and indifference. Surely this is not what the Framers had in mind when they crafted the supremacy clause, while at the same time reserving to the states the essential responsibility of protecting the safety and welfare of their citizens. Madison wrote in The Federalist that “the powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties and properties of the people, and the internal order, improvement, and prosperity of the State.” This extensive power reserved to the states should weigh heavily on preemption decisions. In this light, the Arizona law seems to have been a clear exercise of the state’s police powers, and any burden imposed on the federal government to have been incidental and insignificant.

Obamacare is another issue that tests our understanding of the Constitution and the role of limited government. In federal courts, the Obama administration has defended the bill as a legitimate exercise of Congress’ power to regulate commerce. At issue here is the individual mandate that forces individuals to purchase health care insurance and carries a penalty for failure to do so. Congress has the power to regulate commerce; but does it, as here, have the power to create commerce—i.e., to force individuals to engage in interstate commerce by purchasing health care insurance from private providers? Another way to look at the issue would be to ask whether, under the commerce clause, Congress has the power to regulate inactivity, i.e., the refusal to buy insurance. This would indeed be a novel extension of commerce clause jurisprudence and utterly impossible to square with any notion of commerce that was held by the framers of the Constitution.

In addition to the commerce clause argument, the Obama administration maintains that the individual mandate is authorized by Congress’ power to tax and spend for the general welfare. Congress’ power here is extensive. Over the years, the Court has generally deferred to Congress in determining what constitutes the general welfare. This is proper, since Congress represents the nation and what promotes the general welfare is essentially a political question. If Congress determines that a universal health care system serves the general welfare, then the courts will not interfere. The power to “lay and collect Taxes,” however, has been subject to judicial scrutiny. While Congress may tax for the purpose of raising revenue, it may not use the power of taxation for the express purpose of regulation. A tax that is merely a subterfuge for regulating activities will not be allowed, although a tax that only incidentally regulates behavior will pass constitutional muster as long as the principal purpose is raising revenues.

Madison argued that the general welfare clause was actually a limitation on the federal government. Taxes could be imposed and money spent only for the general welfare—meaning the welfare of the whole of the American people. It is true that Alexander Hamilton had a more extensive view of the general welfare clause, but throughout much of our history Madison’s view prevailed. Today, however, the idea that the general welfare clause was ever intended as a limit on the reach of government has been destroyed by the progressive architects of the welfare state.

In any case, if the individual mandate is to be defended under the general welfare clause, what the plain language of the bill calls a penalty must be regarded as a tax for the express purpose of raising revenue. If the penalty can be sold as a tax, the Obama administration argues, then Obamacare is authorized by the general welfare clause. In the Florida District Court case, the Justice Department made the wholly tendentious—not to say absurd—argument that since the IRS was charged with administering the individual mandate and collecting the penalties, this was sufficient to convert a penalty into a tax. But as Florida District Court Judge Roger Vinson remarked: “Besides the fact that President Obama confidently assured the American people that there would be no new taxes to support the medical insurance scheme, no amount of administrative indirection should be allowed to convert a penalty into a tax for raising revenue. This is not a revenue raising measure and therefore cannot be justified under the general welfare clause.”

But here is a somber thought: If, instead of using the individual mandate, Congress had relied on its general revenue-raising powers, under current Supreme Court doctrine, it is almost certain that Obamacare would be constitutional. It would be an example of Congress spending money for the general welfare.

In conclusion, the only certain method of defeating universal health care and other cases of federal overreach—as it appears that the American public desires to do—is political opposition. A political party dedicated to genuinely limited government—not small government—is an urgent political task. Whether the Tea Party is up to this task remains to be seen—but it is probably our best hope. The Tea Party will have to learn, however, that the task today is not to weaken the power of government—it is to confine the government to the exercise of its delegated powers and to restore to its full vigor the partly national, partly federal form of government that was the legacy of the Founders.

Is America Exceptional?

NORMAN PODHORETZ served as editor-in-chief of Commentary magazine from 1960-1995. He was a Pulitzer Scholar at Columbia University, earning his bachelor of arts degree in 1950. He also holds bachelor’s and master’s degrees from Cambridge University, England, where he was a Fulbright Scholar and a Kellett Fellow. In addition, he has a bachelor’s degree in Hebrew Literature from the Jewish Theological Seminary. He has written for most major American periodicals and is the author of twelve books, including My Love Affair With America and Why Are Jews Liberals?The following is adapted from a speech delivered on September 20, 2012, in Washington, D.C., at Hillsdale College’s third annual Constitution Day Dinner.

ONCE UPON A TIME, hardly anyone dissented from the idea that, for better or worse, the United States of America was different from all other nations. This is not surprising, since the attributes that made it different were vividly evident from the day of its birth. Let me say a few words about three of them in particular.

First of all, unlike all other nations past or present, this one accepted as a self-evident truth that all men are created equal. What this meant was that its Founders aimed to create a society in which, for the first time in the history of the world, the individual’s fate would be determined not by who his father was, but by his own freely chosen pursuit of his own ambitions. In other words, America was to be something new under the sun: a society in which hereditary status and class distinctions would be erased, leaving individuals free to act and to be judged on their merits alone. There remained, of course, the two atavistic contradictions of slavery and the position of women; but so intolerable did these contradictions ultimately prove that they had to be resolved—even if, as in the case of the former, it took the bloodiest war the nation has ever fought.

Secondly, in all other countries membership or citizenship was a matter of birth, of blood, of lineage, of rootedness in the soil. Thus, foreigners who were admitted for one reason or another could never become full-fledged members of the society. But America was the incarnation of an idea, and therefore no such factors came into play. To become a full-fledged American, it was only necessary to pledge allegiance to the new Republic and to the principles for which it stood.

Thirdly, in all other nations, the rights, if any, enjoyed by their citizens were conferred by human agencies: kings and princes and occasionally parliaments. As such, these rights amounted to privileges that could be revoked at will by the same human agencies. In America, by contrast, the citizen’s rights were declared from the beginning to have come from God and to be “inalienable”—that is, immune to legitimate revocation.

As time went on, other characteristics that were unique to America gradually manifested themselves. For instance, in the 20th century, social scientists began speculating as to why America was the only country in the developed world where socialism had failed to take root. As it happens, I myself first came upon the term “American exceptionalism” not in Alexis de Tocqueville’s Democracy in America, where it has mistakenly been thought to have originated, but in a book by the sociologist Seymour Martin Lipset, who used it in connection with the absence in America of a strong socialist party. More recently I have discovered that the term may actually have originated with Joseph Stalin, of all people, who coined the term in the same connection but only in order to dismiss it. Thus, when an American Communist leader informed him that American workers had no intention of playing the role Marx had assigned to the worldwide proletariat as the vanguard of the coming socialist revolution, Stalin reputedly shouted something like, “Away with this heresy of American exceptionalism!” And yet Stalin and his followers were themselves exceptional in denying that America was exceptional in the plainly observable ways I have mentioned. If, however, almost everyone agreed that America was different, there was a great deal of disagreement over whether its exceptionalism made it into a force for good or a force for evil. This too went back to the beginning, when the denigrators outnumbered the enthusiasts.

At first, anti-American passions were understandably fuelled by the dangerous political challenge posed to the monarchies of Europe by the republican ideas of the American Revolution. But the political side of anti-Americanism was soon joined to a cultural indictment that proved to have more staying power. Here is how the brilliant but volatile historian Henry Adams—the descendent of two American presidents—described the cultural indictment as it was framed in the earliest days of the Republic:
In the foreigner’s range of observation, love of money was the most conspicuous and most common trait of the American character . . . . No foreigner of that day—neither poet, painter, or philosopher—could detect in American life anything higher than vulgarity . . . . Englishmen especially indulged in unbounded invective against the sordid character of American society . . . . Contemporary critics could see neither generosity, economy, honor, nor ideas of any kind in the American breast.
In his younger days, Adams defended America against these foreign critics; but in later life, snobbishly recoiling from the changes wrought by rapid industrialization following the Civil War, he would hurl the same charge at the America of the so-called Gilded Age.

We see a similar conflict in Tocqueville. Democracy in America was mainly a defense of the country’s political system and many of its egalitarian habits and mores. But where its cultural and spiritual life was concerned, Tocqueville expressed much the same contempt as the critics cited by Henry Adams. The Americans, he wrote, with “their exclusively commercial habits,” were so fixated “upon purely practical objects” that they neglected “the pursuit of science, literature, and the arts,” and it was only their proximity to Europe that allowed them “to neglect these pursuits without lapsing into barbarism.” Many years later, another Frenchman, Georges Clemenceau, went Tocqueville one better: “America,” he quipped, “is the only nation in history which miraculously has gone from barbarism to decadence without the usual interval of civilization.”

The main reason for the enduring power of the cultural critique was its fervent embrace, beginning in the late 19th century, by the vast majority of the writers, artists, and intellectuals who followed Tocqueville. And so it still goes in 2012, when the putative materialism and crassness of American life are harped upon in movies, television shows, novels, volumes of social criticism, and op-ed pieces too numerous to count.

Like Tocqueville and the foreigners cited by Henry Adams, moreover, these more recent works attribute this crassly philistine attitude to the love of money and “the exclusively commercial habits” that went with it—in other words, to the species of freedom that has done more than anything else ever invented to lift masses of people out of poverty and that would later be known as capitalism. America, these critics were declaring, was exceptional all right—exceptionally bad, or even downright evil.

On the other hand, there have always been defenders of American exceptionalism as a vital force for good. Thus, several decades before switching sides, Henry Adams charged America’s foreign critics with blindness to the country’s amazing virtues. Whereas, Adams wrote, European philosophers and poets could see only rapacity and vulgarity here, the poorest European peasants could discern that “the hard, practical money-getting American democrat was in truth living in a world of dream” and was “already guiding Nature with a kinder and wiser hand than had ever yet been felt in human history.” It was this dream, Adams went on to say, that beckoned to the poor of the old world, calling upon them to come and share in the limitless opportunities it offered—opportunities unimaginable anywhere else.

For a long time now, to speak personally, I have taken my stand with the young Adams, to whom America was exceptionally good, against his embittered older self, to whom it had become exceptionally bad. In my own younger days, I was on the Left, and from the utopian vantage point to which leftism invariably transports its adherents, it was the flaws in American society—the radical 1960s trinity of war, racism, and poverty—that stood out most vividly. It rarely occurred to me or my fellow leftists to ask a simple question: Compared to what is America so bad?

From our modern perspective, much more was wrong with Periclean Athens, or the Italy of the Medicis, or England under the first Queen Elizabeth, or 19th-century Russia under the Romanovs. But this has not disqualified them from being universally ranked among the highest points of human civilization and achievement. After more than 40 years of pondering the question “Compared to what?” I have come to believe with all my heart that the United States belongs on that exalted list. It is true that we have not earned a place on it, as the others mainly did, by our contribution to the arts. Yet it is worth pointing out that even in the sphere of the arts, we have not done too badly. To speak only of literature, names like Walt Whitman, Mark Twain, Edith Wharton, Robert Frost, and many others attest that we have, in fact, done far better than might generally have been expected of a nation conceived primarily to achieve other ends. These ends were social, political, and economic, and it is in them that we have indeed excelled the most.

We have excelled by following our Founding Fathers in directing our energies, as our Constitution exhorts us to do, to the preservation of the blessings of liberty to ourselves and our posterity, as well as to the pursuit of happiness tacitly understood by the Declaration of Independence to require prosperity as a precondition. (In his original draft of the Declaration, of course, Jefferson used the word “property” instead of “pursuit of happiness.”) By remaining faithful in principle—and to a considerable extent in practice—to the ideas by which the Founders hoped to accomplish these ends, we and our forebears have fashioned a country in which more liberty and more prosperity are more widely shared than among any other people in human history. Yes, even today that holds true, despite policies unfaithful both to the letter and to the spirit of the traditional American system that have resulted in a series of political and economic setbacks.

So far as liberty is concerned, until recently no one but libertarians have been arguing that we were insufficiently free in the United States. If anything, some conservatives, dismayed by such phenomena as the spread of pornography and sexual license, thought that we had too much freedom for our own good. But thanks to modern liberalism’s barely concealed hostility to the free market, not to mention the threat posed by Obamacare to religious and economic freedom, many conservatives are now echoing these libertarian arguments, if in a milder form.

Judging by what they say and the policies they pursue, modern liberals are not all that concerned about liberty. What they really care about, and what they assign a higher value to, is economic equality (as reflected in the now famous phrase, “spread the wealth around”). Yet here is what the late Daniel Patrick Moynihan wrote in 1976 about this very issue in connection with the redistributionist ideology then regnant at the United Nations:

And equality . . . what is the record? The record was stated most succinctly by an Israeli socialist who told William F. Buckley, Jr. that those nations which have put liberty ahead of equality have ended up doing better by equality than those with the reverse priority . . . . This is our case. We are of the liberty party, and it might surprise us what energies might be released were we to unfurl those banners.
Four years later, Ronald Reagan came along to unfurl those banners. And just as Moynihan predicted, the result was the release of new political and economic energies that reversed the political and economic decline of the Carter years and that led to our victory in the Cold War.

Of course, the party of liberty Moynihan was talking about was the United States of America and the party of economic equality was the socialist countries of what was then called the Third World. But within America today, an analogous split has opened up, with the Republicans constituting the party of liberty and the Democrats more and more becoming the party of redistribution. Hence the Democrats never stop claiming that the rich are failing to pay their fair share of taxes. Yet after surveying the numbers, the economist Walter Williams of George Mason University asks an excellent question: “What standard of fairness dictates that the top ten percent of income earners pay 71 percent of the federal income tax burden while 47 percent of Americans pay absolutely nothing?” To which an editorial in the Wall Street Journal replies: “There is nothing fair about confiscatory tax policy that reduces growth, denies opportunity, and keeps more people in poverty.”

Then too there is the assumption, blithely accepted by the party of economic equality, that the gap between rich and poor—or even between the rich and the middle class—self-evidently amounts to a violation of social justice. Yet far from being self-evident, this assumption stems from a highly questionable concept of social justice—one that rules out or minimizes the role played by talent, character, ambition, initiative, daring, work, and spirit in producing unequal outcomes in “the pursuit of happiness.”

Furthermore, both the assumption and its correlative concept of social justice run counter to the American grain. As study after study has shown, and as the petering out of the Occupy Wall Street movement has recently confirmed, what Tocqueville observed on this point in the 1830s remains true today: Americans, unlike Europeans, he wrote, “do not hate the higher classes of society” even if “they are not favorably inclined toward them . . . .” Which is to say that most Americans are not prone to the envy of the rich that eats away at their self-appointed spokesmen on the Left.

Nor are most Americans subject to the accompanying passion for economic egalitarianism that made for the spread of socialism in other countries. What explains the absence of that levelling passion is that it has been starved by the opportunities America has afforded millions upon millions to better their lot and the advantage they have been free to take of those opportunities—which in turn explains how unprecedented and unmatched levels of prosperity have been created here and how they have come to be shared more widely here than anywhere else.

Tocqueville also put his finger on a second and related reason for the persistence of this particular feature of American exceptionalism: “The word poor is used here in a relative, not an absolute sense. Poor men in America would often appear rich in comparison with the poor of Europe.” A story I was once told by a Soviet dissident provides an amusing illustration. It seems that the Soviet authorities used to encourage the repeated screening of The Grapes of Wrath, a movie about the Great Depression-era migration of starving farmers from the Dust Bowl to California in their broken-down pickups. But contrary to expectation, what Soviet audiences got from this film was not an impression of how wretched was the plight of the poor in America. Instead they came away marvelling that in America, “even the peasants own trucks.”

Tocqueville further observed that in America, “the poor, instead of forming the immense majority of the nation, as is always the case in aristocratic communities, are comparatively few in number, and the laws do not bind them together by the ties of irremediable and hereditary penury.”

As the great economist and social critic Thomas Sowell has demonstrated time and again, it is still the case that the poor in America “are comparatively few in number.” And except for the black underclass—whose size is generally estimated at somewhere between two and ten percent of the black community and whose plight has thus far resisted every attempt at alleviation over the past 50 years—it is also true that penury in the United States is neither irremediable nor hereditary. As Sowell shows, of those who live on the next rung of the economic ladder, more of whom are white than black, only three percent get stuck in the bottom fifth of the income distribution for more than eight years.

Elaborating on Sowell’s analyses, the economist Mark Perry writes:

In the discussions on income inequality and wage stagnation, we frequently hear about the “top 1%” or the “top 10%” or the “bottom 99%” and the public has started to believe that those groups operate like closed private clubs that contain the exact same people or households every year. But the empirical evidence . . . tells a much different story of dynamic change in the labor market—people and households move up and down the earnings quintiles throughout their careers and lives. Many of today’s low-income households will rise to become tomorrow’s high-income households, and some will even eventually be in the “top 10%” or “top 1%.” And many of today’s “top 1%” or top income quintile members are tomorrow’s middle or lower class households, reflecting the significant upward and downward mobility in the dynamic U.S. labor market.
No such mobility can be found in any of the member countries of the European Union, or anywhere else for that matter. Even in the dismal economic state our nation has fallen into today, it is still exceptional where the degree and the distribution of prosperity are concerned. But to this, modern liberals are willfully blind.

With all exceptions duly noted, I think it is fair to say that what liberals mainly see when they look at America today is injustice and oppression crying out for redress. By sharp contrast, conservatives see a complex of traditions and institutions built upon the principles that animated the American Revolution and that have made it possible—to say yet again what cannot be said too often—for more freedom and more prosperity to be enjoyed by more of its citizens than in any other society in human history. It follows that what liberals—who concentrate their attention on the relatively little that is wrong with America instead of the enormous good embodied within it—seek to change or discard is precisely what conservatives are dedicated to preserving, reinvigorating, and defending.

A similar divide separates liberals and conservatives as to the role America has played in world affairs. Consider the many apologies President Obama has issued for the misdeeds of which he imagines Americans have been guilty in our relations with other countries in general and the Muslim world in particular. Never mind that the United States has spilled blood and treasure to liberate and protect many millions of people from the totalitarian horrors first of Nazism and then of Communism, and that since 9/11 we have spilled yet more blood and treasure fighting against Islamofascism, the totalitarian successor to Nazism. And as to the Muslim world in particular, never mind that, as the columnist Mona Charen puts it, “of the last six wars in which the United States was involved (Kuwait, Bosnia, Kosovo, Afghanistan, Iraq and Libya), four were undertaken to rescue Muslims and the other two (Afghanistan and Iraq) had the side benefit of liberating Muslims —to what end remains an open question.”

In spite of all this, the liberal community seems to think that the rest of the world would be better off without the United States, or at least with it following the policy of “leading from behind.” Admittedly there are paleoconservatives like Pat Buchanan and libertarians like Ron Paul who agree on this point, but most conservatives do not believe that a radical diminution of American power and influence would be good for us or for the world.

Shortly before the election of 2008, then-candidate Obama declared that his election would usher in “a fundamental transformation of America.” The desirability of such a transformation—which would entail the wiping away of as many more traces of American exceptionalism as it will take to turn this country into a facsimile of the social-democratic regimes of western Europe—is the issue at the heart of our politics today. And in the long run, I hope and trust, Americans will reject such a transformation, and elect instead to return to the principles that have made this nation so exceptional—yes, exceptional—a force for good both at home and abroad.

May/June 2012

Richard Vedder Professor of Economics Ohio University

Federal Student Aid and the Law of Unintended Consequences

RICHARD VEDDER is the Edwin and Ruth Kennedy Distinguished Professor of Economics at Ohio University and director of the Center for College Affordability and Productivity. He received his B.A. from Northwestern University and his M.A. and Ph.D. in economics from the University of Illinois. He has written for the Wall Street Journal, National Review, and Investor’s Business Daily, and is the author of several books, including The American Economy in Historical Perspective and Going Broke by Degree: Why College Costs Too Much.

The following is adapted from a speech delivered on May 10, 2012, at Hillsdale College’s Allan P. Kirby, Jr. Center for Constitutional Studies and Citizenship in Washington, D.C.

FEDERAL STUDENT financial assistance programs are costly, inefficient, byzantine, and fail to serve their desired objectives. In a word, they are dysfunctional, among the worst of many bad federal programs.

These programs are commonly rationalized on three grounds: on the grounds that assuring more young people a higher education has positive spillover effects for the country; on the grounds that higher education promotes equal economic opportunity (or, as the politicians say, that it is “a ticket to achieving the American Dream”); or on the grounds that too few students would go to college in the absence of federal loan programs, since private markets for loans to college students are defective.

All three of these arguments are dubious at best. The alleged positive spillover effects of sending more and more Americans to college are very difficult to measure. And as the late Milton Friedman suggested to me shortly before his death, they may be more than offset by negative spillover effects. Consider, for instance, the relationship between spending by state governments on higher education and their rate of economic growth. Controlling for other factors important in growth determination, the relationship between education spending and economic growth is negative or, at best, non-existent.

What about higher education being a vehicle for equal economic opportunity or income equality? Over the last four decades, a period in which the proportion of adults with four-year college degrees tripled, income equality has declined. (As a side note, I do not know the socially optimal level of economic inequality, and the tacit assumption that more such equality is always desirable is suspect; my point here is simply that, in reality, higher education today does not promote income equality.)

Finally, in regards to the argument that capital markets for student loans are defective, if financial institutions can lend to college students on credit cards and make car loans to college students in large numbers—which they do—there is no reason why they can’t also make student educational loans.

Despite the fact that the rationales for federal student financial assistance programs are very weak, these programs are growing rapidly. The Pell Grant program did much more than double in size between 2007 and 2010. Although it was designed to help poor people, it is now becoming a middle class entitlement. Student loans have been growing eight to ten percent a year for at least two decades, and, as is well publicized, now aggregate to one trillion dollars of debt outstanding—roughly $25,000 on average for the 40,000,000 holders of the debt. Astoundingly, student loan debt now exceeds credit card debt.

Nor is it correct to assume that most of this debt is held by young people in their twenties and early thirties. The median age of those with loan obligations today is around 33, and approximately 40 percent of the debt is held by people 40 years of age or older. So when politicians talk about maintaining low interest loans to help kids in college, more often than not the help is going to middle-aged individuals long gone from the halls of academia.

With this as an introduction, let me outline eight problems with federal student grant and loan programs. The list is not exclusive.

(1) Student loan interest rates are not set by the forces of supply and demand, but by the political process. Normally, interest rates are a price used to allocate scarce resources; but when that price is manipulated by politicians, it leads to distortions in the use of resources. Since student loan interest rates are always set at below-market rates, too much money is borrowed for college. Currently those interest rates are extremely low, with a key rate of 3.4 percent—which, after adjusting for inflation, is approximately zero. Moreover, both the president and Governor Romney say they want to continue that low interest rate after July 1, when it is supposed to double. This aggravates an already bad situation, and provides a perfect example of the fundamental problem facing our nation today: politicians pushing programs whose benefits are visible and immediate (even if illusory, as suggested above), while their extraordinarily high costs are less visible and more distant in time.

(2) In the real world, interest rates vary with the prospects that the borrower will repay the loan. In the surreal world of student loans, the brilliant student completing an electrical engineering degree at M.I.T. pays the same interest rate as the student majoring in ethnic studies at a state university who has a GPA below 2.0. The former student will almost certainly graduate and get a job paying $50,000 a year or more, whereas the odds are high the latter student will fail to graduate and will be lucky to make $30,000 a year.

Related to this problem, colleges themselves have no “skin in the game.” They are responsible for allowing loan commitments to occur, but they face no penalties or negative consequences when defaults are extremely high, imposing costs on taxpayers.

(3) Perhaps most importantly, federal student grant and loan programs have contributed to the tuition price explosion. When third parties pay a large part of the bill, at least temporarily, the customer’s demand for the service rises and he is not as sensitive to price as he would be if he were paying himself. Colleges and universities take advantage of that and raise their prices to capture the funds that ostensibly are designed to help students. This is what happened previously in health care, and is what is currently happening in higher education.

(4) The federal government now has a monopoly in providing student loans. Until recently, at least it farmed out the servicing of loans to a variety of private financial service firms, adding an element of competition in terms of quality of service, if not price. But the Obama administration, with its strong hostility to private enterprise, moved to establish a complete monopoly. One would think the example of the U.S. Postal Service today, losing taxpayer money hand over fist and incapable of making even the most obviously needed reforms, would be enough proof against the prudence of such a move. And remember: because of highly irresponsible fiscal policies, the federal government borrows 30 or 40 percent of the money it currently spends, much of that from overseas. Thus we are incurring long-term obligations to foreigners to finance loans to largely middle class Americans to go to college. This is not an appropriate use of public funds at a time of dangerously high federal budget deficits.

(5) Those applying for student loans or Pell Grants are compelled to complete the FAFSA form, which is extremely complex, involves more than 100 questions, and is used by colleges to administer scholarships (or, more accurately, tuition discounts). Thus colleges are given all sorts of highly personal and private information on incomes, wealth, debts, child support, and so forth. A car dealer who demanded such information so that he could see how badly he could gouge you would either be out of business or in jail within days or weeks. But it is commonplace in higher education because of federal student financial assistance programs.

(6) As federal programs have increased the number of students who enroll in college, the number of new college graduates now far exceeds the number of new managerial, technical and professional jobs—positions that college graduates have traditionally taken. A survey by Northeastern University estimates that 54 percent of recent college graduates are underemployed or unemployed. Thus we currently have 107,000 janitors and 16,000 parking lot attendants with bachelor’s degrees, not to mention bartenders, hair dressers, mail carriers, and so on. And many of those in these limited-income occupations are struggling to pay off student loan obligations.

Connected to this is the fact that more and more kids are going to college who lack the cognitive skills, the discipline, the academic preparation, or the ambition to succeed academically. They simply cannot or do not master well much of the rather complex materials that college students are expected to learn. As a result, many students either do not graduate or fail to graduate on time. I have estimated that only 40 percent or less of Pell Grant recipients get degrees within six years—an extremely high dropout or failure rate. No one has seriously questioned that statistic—a number, by the way, that the federal government does not publish, no doubt because it is embarrassingly low.

Also related is the fact that, in an attempt to minimize this problem, colleges have lowered standards, expecting students to read and write less while giving higher grades for lesser amounts of work. Surveys show that students spend on average less than 30 hours per week on academic work—less than they spend on recreation. As Richard Arum and Josipa Roksa show in their book Academically Adrift: Limited Learning on College Campuses, critical thinking skills among college seniors on average are little more than among freshmen.

(7) As suggested to me a couple of days ago by a North Carolina judge, based on a case in his courtroom, with so many funds so readily available there is a temptation and opportunity for persons to acquire low interest student loans with the intention of dropping out of school quickly to use the proceeds for other purposes. (In the North Carolina student loan fraud case, it was to start up a t-shirt business.)

(8) Lazy or mediocre students can get greater subsidies than hard-working and industrious ones. Take Pell Grants. A student who works extra hard and graduates with top grades after three years will receive only half as much money as a student who flunks several courses and takes six years to finish or doesn’t obtain a degree at all. In other words, for recipients of federal aid there are disincentives to excel.

* * *
If the Law of Unintended Consequences ever applied, it is in federal student financial assistance. Programs created with the noblest of intentions have failed to serve either their customers or the nation well. In the 1950s and 1960s, before these programs were large, American higher education enjoyed a Golden Age. Enrollments were rising, lower-income student access was growing, and American leadership in higher education was becoming well established. In other words, the system flourished without these programs. Subsequently, massive growth in federal spending and involvement in higher education has proved counterproductive.

With the ratio of debt to GDP rising nationally, and the federal government continuing to spend more and more taxpayer money on higher education at an unsustainable long-term pace, a re-thinking of federal student financial aid policies is a good place to start in meeting America’s economic crisis.